Local firms must pay attention to AEC integration

Update:
December, 10/2015 - 09:51

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Nguyen Cam Tu

The ASEAN Economic Community (AEC) will be officially es-tablished on December 31, 2015 and Viet Nam will be a member of the community. The Government and ministries have had good preparation for integrating into the community. However, local enterprises don't seem to be ready for their performance in the new playground.

The AEC will officially take shape very soon. How do you evaluate the process of Viet Nam's integration into the community in order to ensure the realisation of AEC?

The establishment of an economic community in general and AEC in particular is a process but not one specific moment.

According to the roadmap, December 31, 2015 is the day of establishing the AEC. More importantly, the next step is to implement four major goals in the first phase of the establishment of AEC, including building of a single market, a production base, a synchronous developed region and a region with competitiveness in international integration.

After forming the community, until 2025, the 10 AEC member countries, including Viet Nam, will have a schedule to implement five other big targets for completing the establishment of the AEC.

Thus, the establishment of the AEC is implemented step by step to have time for the AEC member countries adapting gradually, taking advantages and overcoming challenges.

What are the opportunities and challenges for Viet Nam's enterprises and economy when the nation joins the AEC?

Integration will have more opportunities than challenges.

But, Vietnamese enterprises as well as enterprises in other ASEAN countries must limit challenges and increase opportunities from the AEC in the future.

The first opportunity is a reduction of tariffs. That will create favourable conditions for goods of Vietnamese firms to gain higher export value. In addition, local enterprises will approach larger markets outside of the ASEAN market.

Therefore, Vietnamese enterprises should approach the large markets and big partners via the AEC channel to have more benefits. They should also enhance the preferences that an ASEAN member country gives to enterprises of other ASEAN countries.

The preferences include a reduction of tariffs, abolishment of trade barriers, creation of favaourable conditions for finance, investment, services and free movement of workers.

Therefore, Vietnamese enterprises will have good chances to take advantage of the AEC and when the AEC gains complete development, foreign investors will consider the AEC, including Viet Nam, as a destination having an attractive investment environment.

This is an investment environment having guarantees in institutions, leading to positive changes in the restructure of import and export. The changes will be great changes for Vietnamese enterprises.

However, the tariff reduction will make ASEAN goods increase in Viet Nam's market. That is a large competition for Vietnamese enterprises. If the local firms are not ready to compete with the regional goods, Vietnamese goods and even local export goods will face big pressure in competition.

Meanwhile, the local firms must face a challenge in implementing regulations on intellectual property under the AEC's targets. The regulations on protecting customers will make Vietnamese enterprises be more rigorous in their production process and registration of brands for their goods.

Finally, the competitive ability of Vietnamese enterprises has remained quite low against other countries in the ASEAN countries. That is also a big challenge for local firms when Viet Nam joins this economic community.

What do you think the local enterprises need to prepare to join the regional community?

The government, ministries and sectors have had good preparation for joining the regional economic community. However, the AEC is still strange for most local enterprises because they think ASEAN is a small market and other markets are more important.

In addition, the ASEAN market has still had many administrative procedures and barriers. Advantages in comparison to other ASEAN countries is similar so support in trade activities among them is low and competition is high.

There is a lot of information about the World Trade Organisation and the Trans-Pacific Partnership deal but little information about the AEC.

Meanwhile, many local enterprises have not been able to actively take part in regional integration because they, especially small and medium-sized enterprises, had to cope with economic challenges.

Therefore, Vietnamese enterprises must study carefully the community's targets to take investment and business chances from integrating into the community, including the rate of tariffs reductions, schedules of the reduction, time of opening the market and what sectors would be opened.

They also must improve their competitive ability to take chances and deal with challenges from integrating into the regional economy.

Local firms must have good preparation in protecting their brand and ensuring quality and food hygiene and safety as well as commitments on intellectual property, protection of customers, small and medium enterprises, skilled workers, capital and finance.

What will the Ministry of Industry and Trade do to support local enterprises during the integration into the regional economy after Viet Nam joins the AEC?

ASEAN countries have agreed the nations will complete integration in sectors of services, transport, infrastructure and facilitation in trade next year.

For trade in goods, according to the ASEAN Free Trade Agreement (AFTA), the first priority of the ASEAN is to promote facilitation in trade.

Viet Nam and the ministry have promoted the activity, including issues of regulations on implementing self-certification of origin.

Viet Nam has also prepared to sign the protocol on framework of ASEAN's one-door mechanism and will connect national one-door customs mechanisms with Singapore, Malaysia, Thailand and Indonesia next September.

The ministry has developed a plan of building a database on ASEAN commercial activities to focus on providing information about non-tariff measures related to trade. — VNS